W-8Ben Part 2-#10
Moderator: Mark T Serbinski CA CPA
W-8Ben Part 2-#10
As a Canadian filling this out, should I do #10? If I purchase Canadian stocks paying dividends in my IRA, is there an Article and Paragraph I could quote, that would bring down the withholding rate from 30%? Thank you!
Re: W-8Ben Part 2-#10
As you probably know, the withholding tax is imposed by, and paid to, Canada, not US.
Without the treaty, the tax would be 25%.
At a minimum, if you refer to Article X.2(b) of the treaty, this should reduce the withholding to 15%.
For Cdn stocks held in an IRA or other retirement account, that withholding is *supposed* to be waived entirely, but many brokerages do not inform the Cdn corporation that the stocks are being held in an IRA, thus they withhold 15%.
It should never be 30%. 30% is what the IRS taxes non-residents for US-sourced income (unless affected by treaty). Not this case at all.
Without the treaty, the tax would be 25%.
At a minimum, if you refer to Article X.2(b) of the treaty, this should reduce the withholding to 15%.
For Cdn stocks held in an IRA or other retirement account, that withholding is *supposed* to be waived entirely, but many brokerages do not inform the Cdn corporation that the stocks are being held in an IRA, thus they withhold 15%.
It should never be 30%. 30% is what the IRS taxes non-residents for US-sourced income (unless affected by treaty). Not this case at all.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best